Netflix has altered the financial structure of its proposed acquisition of Warner Bros. in a move that reshapes an already complex bidding battle and raises the stakes for rival suitor Paramount.
The streaming giant announced Tuesday that it amended its winning bid to make the transaction an all-cash deal. The change removes the $4.50 per share in Netflix stock from the original offer. Under the revised terms, Netflix would pay $27.75 per share in cash for Warner Bros. Discovery Global would be spun off as a standalone public company.
The adjustment immediately intensifies pressure on Paramount and its CEO, David Ellison, who have argued that Paramount’s $30 per share all-cash bid for the combined Warner Bros. Discovery entity is clearly superior.
With Netflix now matching the all-cash structure, the debate has shifts squarely toward valuation, particularly the worth of Discovery as a separate company. Going forward, Discovery is expected to become the focal point of the bidding war.
In a proxy filing released Tuesday, Warner Bros. Discovery outlined how its board views the potential value of Discovery Global as a standalone entity. The filing presented several valuation scenarios, with Discovery shares ranging from a low of $1.33 to a high of $6.86 per share, depending on the analytical framework used.
According to the company, a selected public companies analysis suggested an implied equity value between $1.33 and $3.24 per share. The analysis was conducted on a whole-company basis. A sum-of-the-parts analysis pointed to a higher range. That range ran from $2.41 to $3.77 per share. The estimates were based on comparable companies, including Versant.
Warner Bros. Discovery also highlighted a transactions-based analysis, which reflected the potential for future acquisition interest and produced an implied range of $4.63 to $6.86 per share.
Paramount has strongly disputed those assumptions. In a filing earlier this month, the company argued that Discovery should effectively be valued at zero, or no more than $0.50 per share, when measured against Versant’s stock performance. Paramount continues to maintain that its $30 per share offer delivers greater certainty and a cleaner, faster regulatory path.
Warner Bros. Discovery acknowledged that earlier internal estimates had placed Discovery’s value between $0.42 and $2.09 per share at the time the Netflix deal was initially reached. The board said improved operating performance and more refined financial modeling led to the higher ranges disclosed this week.
The dispute has already moved into the courtroom. Ellison recently sued Warner Bros. Discovery seeking additional information about the proposed spin-off and its valuation methods, while also signaling a willingness to pursue a proxy fight. Tuesday’s filing confirmed that the company plans to hold a special shareholder meeting focused on the transaction, though a date has not been set.
If Paramount proceeds with a proxy battle, it will need to persuade shareholders to reject the Netflix-backed deal at that meeting. Meanwhile, executives at Netflix and Warner Bros. Discovery insist the revised all-cash structure positions their agreement for a faster close, citing stronger-than-expected performance at Discovery as a key factor behind the changes.
Below are statements provided by David Zaslav, President and CEO of Warner Bros. Discovery as well as Ted Sarandos, co-CEO of Netflix, Greg Peters, co-CEO of Netflix, and Samuel A. Di Piazza, Jr., Chair of the Warner Bros. Discovery Board of Directors.
“Today’s revised merger agreement brings us even closer to combining two of the greatest storytelling companies in the world and with it even more people enjoying the entertainment they love to watch the most,” said David Zaslav, President and CEO of Warner Bros. Discovery. “By coming together with Netflix, we will combine the stories Warner Bros. has told that have captured the world’s attention for more than a century and ensure audiences continue to enjoy them for generations to come.”
“The WBD Board continues to support and unanimously recommend our transaction, and we are confident that it will deliver the best outcome for stockholders, consumers, creators and the broader entertainment community,” said Ted Sarandos, co-CEO of Netflix. “Our revised all-cash agreement will enable an expedited timeline to a stockholder vote and provide greater financial certainty at $27.75 per share in cash, plus the value from the planned separation of Discovery Global. Together, Netflix and Warner Bros. will deliver broader choice and greater value to audiences worldwide, enhancing access to world-class television and film both at home and in theaters. The acquisition will also significantly expand U.S. production capacity and investment in original programming, driving job creation and long-term industry growth.”
“Over the last decade, when much of the entertainment industry has contracted, Netflix has grown and invested tremendously in the business of film and television in the U.S. and abroad. This transaction will further fuel that growth and investment,” said Greg Peters, co-CEO of Netflix. “By amending our agreement today, we are underscoring what we have believed all along: not only does our transaction provide superior stockholder value, it is also fundamentally pro-consumer, pro-innovation, pro-creator and pro-growth. Our revised all-cash agreement demonstrates our commitment to the transaction with Warner Bros. and provides WBD stockholders with an accelerated process and the financial certainty of cash consideration, while maintaining our commitment to a healthy balance sheet and our solid investment grade ratings. We will continue to work closely with WBD to successfully complete the transaction as we remain focused on our mission to entertain the world and, together, define the next century of storytelling.”
“Our amended agreement with Netflix is a testament to the Board’s unrelenting focus on representing and advancing our stockholders’ interests,” said Samuel A. Di Piazza, Jr., Chair of the Warner Bros. Discovery Board of Directors. “By transitioning to all-cash consideration, we can now deliver the incredible value of our combination with Netflix at even greater levels of certainty, while providing our stockholders the opportunity to participate in management’s strategic plans to realize the value of Discovery Global’s iconic brands and global reach. We look forward to continuing to engage with our investors about the compelling benefits of the transaction as we progress toward our stockholder vote on an accelerated timeline.”
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